Money management is a life skill. The sooner you learn it, the better it is. As chartered accountant Shilpa Umesh puts it: Children are expected to choose a career by the age of 16 and it will do them well to know the value of money early on — when to spend it, when to save it, how to prepare a budget and more. “The ability to effectively handle money sets a strong foundation for career and financial success,” she says. Experts share easy tips.
Identify wants from needs
A need is essential for survival, such as food and water. A want is something one can live without. Take an expensive smartphone, for example. So create a list of your needs and wants, and prioritise your purchases accordingly, says finance expert Mrin Agarwal. “This will help you spend money wisely and you won’t run out of allowance in the middle of the month,” she says.
Set saving goals
Prepare a monthly budget and a list of expected expenses. “Depending on your interests, set short-term goals and give yourself a timeline to achieve your target. Based on the cost of the item, determine how much you can save each week from your allowance towards that. This will help you stay motivated as you get closer to your target,” says Shilpa.
Keep a record of where and how your allowance is being spent on a weekly basis. “This will show you where the bulk of your money is being spent. If you think you are overspending on eating outside, switch to a pocket-friendly option. Look for simple ledger books and sheets at local shops, or online that you can use to track your spending,” suggests Shilpa.
Accompany your parents to banks to see how they function. Offer to fill in withdrawal and deposit slips to get a better understanding of translations. Alternatively, try this mock banking exercise. Think of your parents as ‘personal banks’ whom you can withdraw money from and even deposit the cash to. “That way, you can indirectly regulate the flow of your pocket money,” says Shilpa.
Treat yourself if you meet your savings goals or stay well within the budget. Set aside an empty jar at home to store all the ‘loose change’ as and when they come in. Use that to buy something of your choice at the end of every month. Even a pencil will do. “The joy of buying things from the savings gives people a sense of independence and autonomy,” says Mrin.
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